WW Grainger Inc (GWW)
Fixed asset turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 16,387,000 | 15,137,000 | 12,937,000 | 11,598,000 | 11,413,000 |
| Property, plant and equipment | US$ in thousands | 1,658,000 | 1,461,000 | 1,424,000 | 1,395,000 | 1,400,000 |
| Fixed asset turnover | 9.88 | 10.36 | 9.08 | 8.31 | 8.15 |
December 31, 2023 calculation
Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $16,387,000K ÷ $1,658,000K
= 9.88
The fixed asset turnover ratio measures a company's efficiency in generating sales revenue from its investment in fixed assets, such as property, plant, and equipment. A higher fixed asset turnover ratio indicates that the company is utilizing its fixed assets more efficiently to generate sales.
Analyzing W.W. Grainger Inc.'s fixed asset turnover over the past five years, we observe a fluctuating trend. The ratio was 9.94 in 2023, slightly lower than the previous year's ratio of 10.42. This decline could indicate a decrease in the company's ability to generate sales relative to its investment in fixed assets.
However, when compared to the ratios from 2021 (9.14), 2020 (8.46), and 2019 (8.20), the trend shows a consistent improvement in utilizing fixed assets to generate sales. This suggests that W.W. Grainger Inc. has been increasingly efficient in utilizing its fixed assets to generate revenue over the past five years.
Despite the slight dip in 2023, the overall trend indicates a positive trajectory in the company's management of fixed assets to drive sales growth. Further analysis of the underlying factors contributing to this trend would provide deeper insights into the company's operational efficiency and strategic decision-making.